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The Zest

Making a Private Label Line for a Retailer? Here’s Who Owns the Name

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If you make a product under a retailer's own label, the retailer owns that name, not you. Manufacturing the goods doesn't give you any rights in the mark on the box. What you need to protect is the other name, your own brand, which should be searched, filed and registered in your company's name before the private label order ties up your production line.

That split, their label is theirs and your brand is yours, sounds obvious. The contracts I see at this stage often blur it, and a private label order is usually the biggest order a small brand has ever taken, so the blur is expensive.

Why the store owns its label

Under the Trademark Act, the owner of a mark is the party that controls the nature and quality of the goods sold under it. The USPTO's manual puts it this way: "The essence of related-company use is the control exercised over the nature and quality of the goods or services," and the party with that control is the one who may apply to register. When a store sends you a spec, approves your samples, tells you what goes on the label and sells the result under its name, the store is controlling the goods. The manual says an applicant can claim ownership of a mark "when the mark is applied on the applicant's instruction," including where "the applicant contracts with another party to have goods produced for the applicant." In that sentence, the retailer is the applicant. You're the other party.

So if a maker files an application for the retailer's label because "we make it," the application is filed by the wrong owner. The manual is blunt about that: "If the applicant does not own the mark on the application filing date, the application is void," and "this defect cannot be cured by amendment or assignment." Nobody at the store will thank you for the gesture.

Why making it doesn't make it yours

The flip side is just as clear. A party that merely moves goods in trade "does not acquire a right of ownership in the manufacturer's or producer's mark merely because it moves the goods in trade." The same logic runs in both directions: the distributor doesn't own the maker's brand, and the maker doesn't own the distributor's. Ownership follows control of quality and the name the public sees, not who ran the machine.

That's the frame for everything below. Imagine "Saltmarsh Provisions," an invented hot sauce maker, taking a private label order for a grocery chain's house brand. The chain's house brand is the chain's mark. Saltmarsh is the chain's mark, too? No. Saltmarsh is Saltmarsh's, and it stays that way only if Saltmarsh keeps it that way.

Keep your own brand separate, and registered

Here's where private label deals quietly go wrong. Three patterns I watch for.

The product is the same, only the label changes. That's fine, as long as the retailer's contract doesn't claim the recipe, the design or the name you sell it under elsewhere. Read the ownership clause. "All intellectual property in the Products" is a very different sentence from "all intellectual property in the Retailer Marks."

Your name shows up on the retailer's packaging. "Made by Saltmarsh Provisions for the chain" is a common line on a private label box. It can be a good thing for your brand, and it's also use of your mark that you need to control. If the retailer can redesign that line, shrink it, restyle it or keep using it after the contract ends, you've handed over the use of your name without the quality control the law expects from an owner. The statute says related company use "shall inure to the benefit of the registrant or applicant" only when the owner controls "the nature and quality of the goods or services." Write the control in, or keep your name off the box. The article on licensing and quality control explains why control isn't optional.

Your brand isn't registered yet. This is the one that matters most. A private label order usually means a bigger factory run, new co-packers, new freight partners and more people seeing your brand. Every one of those is a chance for someone else to file your name first. File now, in your company's name, in the classes you actually ship. Under 15 U.S.C. 1057(c), the filing "shall constitute constructive use of the mark," which fixes your nationwide priority date once the registration issues. The production run article walks through the order of operations.

What if the store's name is close to yours

Sometimes a retailer's house brand lands close to the maker's own brand, by accident or because the buyer liked what they saw. The retailer's mark and your mark can't both be registered for related goods if they're confusingly similar. The USPTO's manual says goods "do not have to be identical or even competitive to find a likelihood of confusion," they "need only be related in some manner," and for an unrestricted registration it presumes the goods "move in all normal channels of trade" and "are available to all classes of purchasers." If your brand is on file first, you have the earlier date. If it isn't, the retailer's filing can block you, and a retailer's trademark budget is bigger than yours.

That's the practical reason to have the search done before the buyer meeting, not after. Seed is a $650 clearance search with a written opinion. It tells you whether your name is clear, and it gives you something concrete to point to if a retailer's house brand drifts toward it.

The contract language that keeps the lines clean

I'm not going to draft your agreement here, but these are the points I'd want settled on paper before the first purchase order. Who owns the retailer's label: the retailer, in plain words. Who owns your brand, your formulas, your artwork and your molds: you, in plain words, with the retailer getting no license beyond what the deal needs. Whether your name appears on the retailer's packaging, in what form, with your approval, and for how long. Whether you can sell the same product under your own brand, and to whom. What happens to leftover inventory with the retailer's label on it when the contract ends. The contracts page covers the agreements we draft, and the article on contractors and logo ownership explains why "we paid for it" doesn't settle ownership of anything.

The private label cosmetics article covers the mirror image of this question, where you're the brand and someone else is the factory.

The order of operations

Search your own brand. File it in your company's name. Read the retailer's ownership clause and fix it so their label is theirs and your brand is yours. Decide whether your name goes on their box, and if so, keep approval rights. Then sign, and run the line.

Seed is a $650 clearance search with a written opinion. Grove is $2,600: the search, the opinion and the federal application, with procedural Office Actions included. USPTO fees are separate, $350 per class.

Questions about your name? Email us at hello@citrus.legal, or book a paid 30-minute consultation (opens in a new tab) for advice on your specific situation.

Sources

This article is general information, not legal advice. Reading it does not create an attorney-client relationship.

When you are ready to own it

One mark. One flat fee. One attorney.

The search, the written opinion, the federal application and procedural Office Actions, for $2,600 or three payments of $950. Nothing is filed until you approve the search. If I call your mark low risk and the USPTO refuses it, I file again at no attorney fee.

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